Nashville Symphony paid $35 million to reach Schermerhorn deal

Jul. 26, 2013

Schermerhorn Symphony Center / handout

Written by

Walter F. Roche Jr.

The Tennessean

The Nashville Symphony put up a total of $35 million in liquid assets and accelerated capital contributions as part of the deal to rescue the Schermerhorn Symphony Center from foreclosure last month.

The new details of the last-minute rescue were disclosed Friday in an interview with the symphony’s board chairman, Ed Goodrich and Myles MacDonald, the Symphony’s chief operating officer.

At the time of the near-foreclosure, the orchestra owed a remaining $83.5 million from the original 2004 bond issue of $102 million. Now, it owes just $20 million to a company formed by the symphony’s largest backer and former board chair, Martha Ingram. Ingram’s Symplace Realty took over a rewritten $20 million mortgage from Bank of America.

MacDonald said the orchestra used $28 million in liquid assets and $7 million in accelerated capital contributions to seal the deal with a group of lenders headed by Bank of America.

“The repayment structure is much better,” Goodrich said.

When the refinancing deal was announced, the symphony publicly thanked Ingram, and she acknowledged that part of her contribution was “the acceleration of a long-term charitable gift.”

It’s unclear how much the symphony has remaining in reserves. The latest tax return for the symphony lists some $50 million invested in publicly traded and other securities for the fiscal year ending July 31, 2012.

Goodrich and MacDonald also detailed a series of steps underway to get the orchestra’s finances on firm footing, including a renewed focus on the annual fundraising campaign.

The organization’s latest return shows that expenses exceeded revenues by $11.7 million and that was not the first year that the symphony ran up a deficit. Deficits of about $20 million were recorded in 2008-09 and 2009-10.

“There’s always going to be an operating deficit,” Goodrich said, and that the symphony has to make up the gap.

He said there was “understandable reluctance” on the part of donors in the midst of the symphony’s recent and very public financial crisis. “But now I think we can demonstrate that we are a reliable investment.”

MacDonald said contract talks with the musicians union were progressing with weekly negotiations. The existing contract expires next week.

Goodrich said that the Symphony has also signed music director Giancarlo Guerrero to a new contract that runs until 2020. His old contract was set to run out next year.

“He is in great demand all over the world,” said Goodrich, noting Guerrero just recently completed a foreign appearance.

As revealed in a recent presentation to the Nashville Kiwanis, Guerrero and Alan Valentine, president and CEO, recently took a voluntary 15 percent cut in pay, along with a six percent cut in retirement contributions. Senior and middle management staff got their pay reduced by 15 percent as well.

Goodrich said Friday that all staff took a 6 percent retirement benefit cut.

Other steps taken to reduce costs include the layoff of four additional staff members, in addition to food service workers who were let go in the midst of the loan negotiations.

Goodrich said that step could actually improve efforts to rent out the hall to private parties who often want to hire their own caterers.

“We really need to adapt the organization to a size and scale that is sustainable,” Goodrich said, adding that they were taking a “holistic approach” while maintaining the orchestra’s twin missions of providing fine music and maintaining educational outreach efforts.

“Our mission will continue to be what it’s always been,” Goodrich said.

An additional effort he said will be to engage board members, many with business expertise, more directly in the operations of the symphony.

Goodrich also said that efforts will be made to increase revenue by bringing in special performances, some with the symphony and some not.

“As we learned, the classical music-only model doesn’t work,” Goodrich said. The special events have been “very successful,”he added.

MacDonald said that despite the adverse impact of the financial crisis ticket sales are running above last year. In fact, single-event ticket sales have been stronger than ever, MacDonald said, with the sales of those tickets on one recent day setting an all-time record.